Procedure

The MMV procedure is as follows:

Voting

Preferences

Counting

Sorting

Candidate ordering

Winner selection

MMV can also be used to create a sorted list of preferred candidates.
To create a sorted list, repeatedly use MMV to select a winner,
remove that winner from the list of candidates,
and repeat (to find the next runner up, and so forth).

Voting, preferences, counting

In the votes, each voter's preferences are considered.
For example, if a voter states "A > B > C"
(A is better than B, and B is better than C), then the count
should add one for A in A vs. B, one for A in A vs. C, and
one for B in B vs. C.
Voters may also express indifference (e.g., A = B), and unstated
candidates are assumed to be equally worse than the stated candidates.

After counting the majorities can be determined.
If "Vxy" is the number of Votes that rank x over y, then
"x" wins if Vxy > Vyx, and "y" wins if Vyx > Vxy.

Sorting

The pairs of winners, called the "majorities", are then sorted from
the largest majority to the smallest majority.
If two matchups have the same number of winning votes, the one with the largest margin (weakest loser) is listed first.

Candidate ordering, winner selection

Using the sorted list, the candidates are ordered from greatest majority to least,
unless the pair will create a circularity
(e.g., where A is more than B, B is more than C, but C is more than A), then the smallest majority in the circularity is eliminated.
The candidate with the most paiwise wins (i.e. the Maximum Majority) wins the election.

An example

The situation (voting)

Imagine an election for the capital of Tennessee, a state in the United States that is over 500 miles east-to-west, and only 110 miles north-to-south. Let's say the candidates for the capital are Memphis (on the far west end), Nashville (in the center), Chattanooga (129 miles southeast of Nashville), and Knoxville (on the far east side, 114 northeast of Chattanooga). Here's the population breakdown by metro area (surrounding county):

Let's say that in the vote, the voters vote based on geographic proximity. Assuming that the population distribution of the rest of Tennessee follows from those population centers, one could easily envision an election where the percentages of votes would be as follows:

[A] indicates voters who preferred the candidate listed in the column caption to the candidate listed in the row caption

[B] indicates voters who preferred the candidate listed in the row caption to the candidate listed in the column caption

[NP] indicates voters who expressed no preference between either candidate

Counting

First, list every pair, and determine the winner:

Pair

Winner

Memphis (42%) vs. Nashville (58%)

Nashville 58%

Memphis (42%) vs. Chattanooga (58%)

Chattanooga 58%

Memphis (42%) vs. Knoxville (58%)

Knoxville 58%

Nashville (68%) vs. Chattanooga (32%)

Nashville 68%

Nashville (68%) vs. Knoxville (32%)

Nashville 68%

Chattanooga (83%) vs. Knoxville (17%)

Chattanooga: 83%

Note that absolute counts of votes can be used, or
percentages of the total number of votes; it makes no difference.

Sorting

The votes are then sorted.
The largest majority is "Chattanooga over Knoxville"; 83% of the
voters prefer Chattanooga.
Nashville (68%) beats both Chattanooga and Knoxville by a score
of 68% over 32% (an exact tie, which is unlikely in real life
for this many voters).
Since Chattanooga > Knoxville, and they're the losers,
Nashville vs. Knoxville will be added first, followed by
Nashville vs. Chattanooga.

Thus, the pairs from above would be sorted this way:

Pair

Winner

Chattanooga (83%) vs. Knoxville (17%)

Chattanooga 83%

Nashville (68%) vs. Knoxville (32%)

Nashville 68%

Nashville (68%) vs. Chattanooga (32%)

Nashville 68%

Memphis (42%) vs. Nashville (58%)

Nashville 58%

Memphis (42%) vs. Chattanooga (58%)

Chattanooga 58%

Memphis (42%) vs. Knoxville (58%)

Knoxville 58%

Candidate ordering, winner selection

The pairs are then sorted in order, skipping any pairs
that would create a cycle:

Chattanooga over Knoxville.

Nashville over Knoxville.

Nashville over Chattanooga.

Nashville over Memphis.

Chattanooga over Memphis.

Knoxville over Memphis.

In this case, no cycles are created by any of the
pairs, so none are eliminated.

In this example, Nashville is the winner using MMV - and would be in any Condorcet method.

Ambiguity resolution example

Let's say there was an ambiguity. For a simple situation involving candidates A, B, and C.

A > B 72%

B > C 68%

C > A 52%

In this situation we sort the majorities starting with the greatest one first.

Lock A > B

Lock B > C

We eliminate the final C > A as it creates an ambiguity or cycle.

Therefore, A is the winner.

Summary

In the example election, the winner is Nashville.
This would be true for any Condorcet method.
Using the first-past-the-post system and some other systems, Memphis would have won the election by having the most people, even though Nashville won every simulated pairwise election outright. Using Instant-runoff voting in this example would result in Knoxville winning, even though more people preferred Nashville over Knoxville.